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Priceless is not a marketing strategy

In the past week I have done several stories for ReadWriteWeb where I had to really dig to get the price from the vendor. This seems the beginning of a trendlet, especially when it comes to Web-based services. Even IBM’s press announcement had nothing on its pricing plan, something that would have been unheard of a few years ago back in the day when the “ivories” were chock full of product info. (They were called this because they came printed out on ivory-colored paper stock, back when we didn’t have Web sites to review these announcements. You know, in the days long ago around the same time that Tom Watson was using punched cards.)

The argument for omitting prices goes something like this: We sell a service that is based on (latency, traffic, bandwidth consumed, storage, insert your favorite metric here), and there are wide variations in customer usage, so each deal is priced separately. We can’t really quote a single MSRP because of the way we price our service/product.

Well, that is nice. But what is really going on is that the vendor hasn’t decided on its pricing strategy, and so has instructed their PR firm or marcom team to just omit this information and see what the reaction is by potential customers and other related parties. Based on this free research, they will come back and adjust the Web pages and add the appropriate pricing.

But is so wrong-headed. The wrong price can turn the most amazing product into a dog, and not putting a price online (or a way to at least have potential customers calculate a price) just makes everyone more frustrated and the chance to actually lose a customer to a competitor, where this information is clearly stated.

I mean, even Amazon’s Web Services, which has certainly one of the most complex pricing schemes around, at least puts this page up where you can try to calculate what your usage will be. They don’t make it easy to find it though. And they do frequently change their prices, as the costs for providing compute power and storage goes down. What is even more relevant is that there are new businesses that are offering to analyze your AWS usage and suggest ways that you can minimize your bills, such as UptimeCloud.com. (You know your pricing is out of whack when independent vendors come up with tools that can help explain it to your customers!)

So folks, put a price tag on your Web site and include in your announcements and other press materials. Priceless may work as a branding for Mastercard but not for most IT services.

7 thoughts on “Priceless is not a marketing strategy”

They started as “blue letters” — probably in the 70s — way after the Watson, Junior era. Then the blue letters morphed into “ivory letters,” probably in the ’80s.

Following is an excerpt from the online IBM archives:

IBM “blue letter” — “The document once distributed by the IBM Data Processing Division to announce a new product or education course. So named because it was printed on blue paper, the blue letter contained the generalized product description and specifications that were used to make the IBM marketing representatives expert on the new offering. The blue letters were later printed on ivory colored paper and it then became fashionable to call the documents ‘ivory letters.’ ”
SOURCE: http://www-03.ibm.com/ibm/history/reference/glossary_b.html

David,
I’ve been in marketing a long time. The challenge with giving pricing is that every company has a different policy for discounting (at least in the Enterprise IT business). The result is list prices are not good guidance for the realistic street price. Every market today is competitive and pricing will vary based on the size of the deal, clout of the customer, state of the vendor business, etc. So when a number is posted on the website (or in an article) it it might as well be ignored. You stated it yourself:

“But is so wrong-headed. The wrong price can turn the most amazing product into a dog, and not putting a price online (or a way to at least have potential customers calculate a price) just makes everyone more frustrated and the chance to actually lose a customer to a competitor, where this information is clearly stated.”

Thanks for your note Mike. I think there is a way to do this with a range, to set up expectations. Certainly, there are discounts etc. But if a potential user goes into the process knowing that something costs $10,000, they have an idea what kind of problem they need to solve for that kind of dough, vs. a $100,000 product. So I think you need some kind of starting place. I know the days of MSRPs are over. But just flatly saying “we don’t quote prices to the press” is just wrong. I hear from my readers all the time that say “you guys just ignore what things cost” and I am trying to change that point of view.

This post last year along with some comments by David made us re-think the approach to pricing and selling our mobile enterprise solution. We agree, transparency and clarity in pricing is critical, especially in new markets where customers might not be ready for major investments and need to find solid solutions at reasonable prices.

But it goes beyond pricing, making products easy to adopt, deploy and purchase is also critical. Consumerization of IT affects not just device or application choices, it also influences the way in which we prefer to buy solutions.